GemNotes

December 1, 1995byRussell Shor

’95 COULD BE RECORD YEAR FOR DE BEERS

This could be a record year for rough diamond sales by De Beers’ Central Selling Organisation, say stock analysts in Johannesburg, SouthAfrica, home of De Beers. Responding to a 7.7% jump in the company’s stock price in early October, the analysts said rough sales should top $4.4 billion this year.

First-half sales of $2.54 billion ran slightly below 1994 levels. But the company’s allocations of diamonds in the second half have been running ahead of last year. De Beers was forced to curtail its allocations in the second half of last year because Russia had made so many large-scale sales outside of theCSO. Russia is still selling diamonds outside of De Beers, but not as many as last year. As a result, De Beers’ sight allocations have been larger than last fall’s (September’s totaled about $400 million).

The CSO has cut back on smaller, lower quality goods because their supply has increased while demand hasn’t. But sales of larger and better quality rough &endash; where the vast majority of the money is &endash; have held up well.

Analysts also say that optimism has heightened in recent weeks as De Beers continues negotiations with Russia for a new diamond marketing contract to replace one that ends this year.

Over the past two years, the value of De Beers stock fell some 35%, reflecting pessimism about Russia, say analysts. In fact, South African stock analyst Des Mayers told JCK six months ago the lower stock price essentially reflected only the value of the company’s non-diamond assets. The optimism of recent weeks contributed to the rise in stock prices.

JEWELERS EXPAND THEIR GEM SPECTRUM

A new survey conducted by Jewelers of America and the International Colored Gemstone Association shows growing enthusiasm among U.S. jewelers for gems other than the traditional ruby, sapphire and emerald.

While 98% of those surveyed say they do indeed sell these three, a number of other stones also score high. The top tier of popularity &endash; defined as gems carried by 85% or more of the retailers queried &endash; also includes amethyst, blue topaz, rhodolite garnet, aquamarine, tanzanite, tourmaline, citrine, opal and peridot. When the cutoff is dropped to 70%, lapis lazuli, fancy sapphire and tsavorite garnet join the list of stones carried.

The survey also showed growth in colored stone sales. Thus sales of colored stones have risen in the past five years for 80.5% of jewelers surveyed, stayed the same for 4.4% and dropped for 15.1%. The median increase was roughly 15%.

Colored stones are important for many jewelers:

% of Jewelry Store Sales Provided by Colored Gems

% of jewelers surveyed

10% or less

21%

11%-20%

40%

21%-30%

21%

30% or more

18%

The study also found that gem enhancement remains an important issue. Some 72% of jewelers say they tell customers about routine enhancements; 6% do so sometimes. Of those who regularly disclose enhancement, 64% do it verbally, 14% do it in writing and 22% use information such as gem brochures.

While 60% of jewelers say dealers of loose gems provide information about enhancement, only 30% say suppliers of colored stone jewelry do so.

Results of the survey were published in the October issues of the ICAGazette and JA’s J Report.

SOUTH SEAS PEARLERS ELECT NEW LEADERS

The South Seas Pearl Consortium, an organization of pearl producers and importers formed to promote large South Seas pearls, has elected its first slate of officers.

Nick Paspaley of Paspaley Pearling Co. is chairman and George Kalis of Broome Pearls Pty. is vice chairman. These are the largest pearl producers in Australia. Leung Sik Wah, director of Cogent Trading, a leading Hong Kong importer, is treasurer. Salvador Assael of Assael International, New York, N.Y., is secretary.

The organization also comprises a number of top retailers as associate members and has more than 30 advisory members who contribute to building a $2 million campaign war chest. The organization is funded with a “tax”of A$2 on each shell that member companies have in the water plus contributions from the Australian government and several importers.

The promotional efforts are aimed at the U.S., Japan and East Asia and are coordinated by two NewYorkCity agencies:Evins Communications Ltd. for public relations and Ziccardi & Partners for advertising.

The goal is to equate Australian South Seas pearls with top gemstones and to differentiate them from less costly pearls, says Christine Gotz, account executive for Evins. Gotz is developing a brand-name logo for the Australian South Seas Pearl Consortium that will be used in a series of videotapes, displays and brochures designed to educate high-income consumers and convey these pearls’ “aura of nobility, prominence and culture.”

HASENFELD SPONSORS GIA RESEARCH

Hasenfeld-Stein Inc., a New York City diamond company, is sponsoring a comprehensive review of the effect of fluorescence on diamonds at the Gemological Institute of America. “Addressing fluorescence and its causes in a way that could be understood by diamond dealers and communicated to their clients will help build stability and strengthen the diamond market worldwide,” says Hertz Hasenfeld.

The research will examine methods used to determine fluorescence in diamond grading, investigate the impact fluorescence has had on diamond trading and quantify the impact of fluorescence on the appearance of a diamond, particularly in higher color grades.

“We intend to address misconceptions about grading fluorescent diamonds and refine the definition of fluorescence and its causes into a terminology that can be easily understood by diamond dealers and their customers,” says Dr. James Shigley, GIAresearch director.

INDIA SEEKS DIAMOND PROSPECTORS

Several mining companies &endash; including De Beers and Ashton &endash; are betting that more big diamonds can be found in India, source of the Kohinoor, Hope and other legendary diamonds. As a result, they’re competing for diamond and alexandrite exploration rights the government is making available in a 2,000-sq.-mile area in the state of Madhya Pradesh, says D. Wickramanayake of Trans Asia News Service.

More than 20 companies have applied, many of them foreign.The government has relaxed rules that formerly allowed foreign participation only as a minority shareholder in a joint operation. Now the government wants to restrict prospecting rights to one or two larger companies to attract substantial development aid, says the report.Companies that receive prospecting rights will have to commit at least US$3.8 million.

NEW PIE CUT APPEARS ROUND

Baguettes USA introduces the Pie Cut, comprising four pie-shaped diamonds set together so they look like a brilliant cut.

The Pie Cut weighs 1 carat and is 6.5mm in diameter, the same as a carat round, but costs about 25%less. It’s achieved with modified marquise and princess cuts. The stones are flatter than traditional round brilliants, so they can be set easily into pendants and earrings.

ISRAEL HONORS DIAMOND DEALER

Israel’s Ministry of Industry and Commerce has named diamond exporter Rachel Levy Exporter of the Year, the first time a woman has been so honored.

A 35-year veteran of the diamond business, Levy was the first woman inIsrael to establish a successful diamond business without previous family connections. Her company exported more than $35 million worth of diamonds to the Far East and other markets in 1994 and was expected to export $40 million in ’95.

Levy’s office takes the pick of production from more than 40 small and medium-sized polishing companies in Israel. She has spent many years cultivating the markets in Hong Kong, Singapore, Taiwan and South Korea &endash; now the fastest-growing diamond markets in the world. She planned to expand to the U.S. market this year.

HALPERN RECEIVES PUBLIC RELATIONS AWARD

The International Public Relations Association has presented its Gold World Award to Halpern Public Relations Ltd. of Tel Aviv, Israel, for its work on behalf of the country’s diamond industry.

The award “recognizes the contribution to excellence in public relations practice made by the international public relations program of Israel’s diamond industry.”

The citation says Halpern’s public relations program “has produced tens of thousands of inches of valuable editorial coverage” of Israel’s diamond industry in world markets. Halpern has represented the Israel Diamond Exchange for more than 15 years and also represents the Israel Diamond Institute.

IPRA is headquartered in Zurich, Switzerland.

ANTWERP BOURSE NAMES U.S. LIAISON

The Antwerp Diamond Bourse has named Sylvain Ringer of Andico, New York, N.Y., as liaison to the U.S. diamond and retail industries.

Ringer says his company will provide contacts for qualified retailers and diamond dealers who need a sponsor to enter the bourse. The company also can help to arrange travel and hotel accommodations.

The liaison program is part of an overall effort to attract more foreign buyers, says Bram Fischler, president of the bourse. The bourse has also reduced the entrance fee to $1,750 for Belgian and foreign dealers, enlarged facilities for foreign buyers and made it easier for members to sign in foreign buyers.